Get Approved for Accounts Receivable -- Factoring
Say Goodbye to Cash Flow Gaps with Accounts Receivable Factoring. Turn unpaid invoices into the cash flow you need for a steady stream of working capital with accounts receivable financing.
Introduction to Accounts Receivable/Factoring
Accounts receivable factoring, also known as invoice factoring, is a financial transaction in which a business sells its outstanding invoices (accounts receivable) to a factoring company at a discount. This enables the business to receive immediate cash flow instead of waiting for the invoices to be paid by customers. Factoring is particularly useful for businesses that need quick access to cash to cover operational expenses, invest in growth, or manage seasonal fluctuations in revenue.
Benefits of Accounts Receivable Factoring
- Improved Cash Flow: Provides immediate cash to the business, improving liquidity and enabling timely payment of bills and salaries.
- No Debt Incurred: Unlike loans, factoring is not a debt; it involves selling an asset (receivables), so it doesn't add to the business's liabilities.
- Credit Protection: Factoring companies often take on the risk of non-payment, providing credit protection and reducing bad debt.
- Flexible Financing: The amount of financing grows with the sales, offering more flexibility compared to traditional loans.
- No Collateral Required: Businesses don’t need to provide additional collateral beyond the invoices themselves.
- Outsourced Collections: Factoring companies handle the collections process, saving time and resources for the business.
Qualifications for Accounts Receivable Factoring:
- B2B Invoices: The business should have invoices billed to other businesses (B2B transactions).
- Creditworthy Customers: The customers to whom the invoices are billed should have good credit history.
- Verified Invoices: Invoices should be verified and free from disputes or potential issues.
- Minimum Monthly Sales: Some factoring companies may require a minimum amount of monthly sales or invoices to qualify.
- No Liens on Receivables: The receivables should not have existing liens or be pledged as collateral for other loans.
